Canadian regulator bows to pressure on Internet billing

Network World Canada –

Acknowledging a growing public protest against its decisions over Internet data caps for consumers, Canada's telecommunications regulator has decided to review its rulings before being ordered to do so by the government.

Konrad von Finckenstein, the chairman of the Canadian Radio-television and Telecommunications Commission (CRTC), told a parliamentary committee Thursday that it will delay a decision allowing large telecom carriers to impose their usage-based billing policies on small Internet service providers (ISPs) that buy wholesale connectivity from them.

"We want to make sure we got it right," he told the committee. "We will look at it with fresh and open eyes."

But he didn't promise the politicians the decision would be overturned, a point quickly grabbed by Tom Copeland, owner of a small who heads a group called the Canadian Association of Internet Providers.

"The CRTC chair provided little comfort to Canadians or competitive ISPs that the commission wouldn't come to the same conclusion after their review," he said in an email.

In his testimony Von Finckenstein made it clear the commission believes usage-based, or per byte, billing is a legitimate strategy to ensure a minority of heavy Internet users pay their fair share.

"Ordinary Internet users should not be forced to pay for the bandwidth consumed by heavy users," he said.

In addition, he said, the commission tried to protect small ISPs -- who he called the "drivers of innovation"-- by ordering large carriers to knock 15 per cent off the price they charge ISPs to give the smaller providers room to compete in pricing.

"Our whole intent was to make sure the small ISPs remain as a competitive edge to discipline the large companies," von Finckenstein said.

The chairman also turned aside a suggestion that the CRTC is reacting to pressure from Prime Minister Stephen Harper and Industry Minister Tony Clement, who have publicly said they have "grave concerns" about the decision. The cabinet has the power to overturn the decision or toss it back into the lap of the commission.

The uproar is around the commission's recent decision to finalize a ruling it made last year that carriers can impose the same usage-based billing plans most of their own customers have been facing since 2007 onto the ISPs who buy wholesale connectivity. Since then some 250,000 people have signed a petition protesting the move.

For years small ISPs have been offering unlimited plans to residential customers as a way of differentiating themselves from the Internet plans of the large phone and cable companies However, to combat the rising use of video sharing the big carriers have started Internet traffic management strategies. One strategy is usage-based billing, which places caps on the amount of data subscribers can download a month. Use more than the cap and the user pays extra.

However, small ISPs complain the effect is that their rates are identical to the big carriers, putting them in danger of being pushed out of business. Seeing the writing on the wall many have reluctantly changed their rates to impose caps already.

The most popular packages from providers of all sizes have rates of around CDN$33 a month with a 25 gigabit monthly cap, although at least one national ISP offers a $32 monthly plan with a 200 GB cap.

In his testimony, von Finckenstein said that in 2009 the average Canadian residential subscriber used 15.4 GB of data a month.

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